Initiation of Antidumping Duty Investigation: Bulk Aspirin From the People's Republic of China

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-853]

Initiation of Antidumping Duty Investigation: Bulk Aspirin From

the People's Republic of China

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: June 23, 1999.

FOR FURTHER INFORMATION CONTACT: Craig W. Matney or Alysia Wilson,

Office 1, AD/CVD Enforcement, Import Administration, International

Trade Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-

1778 or (202) 482-0108, respectively.

Initiation of Investigation

The Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are

references to the provisions effective January 1, 1995, the effective

date of the amendments made to the Tariff Act of 1930 (the Act) by the

Uruguay Round Agreements Act (URAA). In addition, unless otherwise

indicated, all citations to the Department of Commerce's (the

Department's) regulations are to 19 CFR part 351 (1998).

The Petition

On May 28, 1999, the Department received a petition filed in proper

form by Rhodia, Inc., referred to hereinafter as ``the petitioner.''

The petitioner filed supplemental information to the petition on June

14, 1999.

In accordance with section 732(b) of the Act, the petitioner

alleges that imports of bulk aspirin from the People's Republic of

China (PRC) are being, or are likely to be, sold in the United States

at less than fair value within the meaning of section 731 of the Act,

and that such imports are materially injuring or threaten to injure an

industry in the United States.

The Department finds that the petitioner filed this petition on

behalf of the domestic industry because it is an interested party as

defined in section 771(9)(C) of the Act and it represents, at a

minimum, the required proportion of the United States industry (see

Determination of Industry Support for the Petition section below).

Scope of Investigation

For purposes of this investigation, the product covered is bulk

acetylsalicylic acid, commonly referred to as bulk aspirin, whether or

not in pharmaceutical or compound form, not put up in dosage form

(tablet, capsule, powders or similar form for direct human

consumption). Bulk aspirin may be imported in two forms, as pure ortho-

acetylsalicylic acid or as mixed ortho-acetylsalicylic acid. Pure

ortho-acetylsalicylic acid can be either in crystal form or granulated

into a fine powder (pharmaceutical form). This product has the chemical

formula C9H8O4. It is defined by the

official monograph of the United States Pharmacopoeia (USP) 23. It is

classified under the Harmonized Tariff Schedule of the United States

(HTSUS) subheading 2918.22.1000.

Mixed ortho-acetylsalicylic acid consists of ortho-acetylsalicylic

acid combined with other inactive substances such as starch, lactose,

cellulose, or coloring materials and/or other active substances. The

presence of other active substances must be in concentrations less than

that specified for particular nonprescription drug combinations of

aspirin and active substances as published in the Handbook of

Nonprescription Drugs, eighth edition, American Pharmaceutical

Association. This product is classified under HTSUS subheading

3003.90.0000. Although the HTSUS subheadings are provided for

convenience and customs purposes, the written description of the

merchandise under investigation is dispositive.

During our review of the petition, we discussed the scope with the

petitioner to ensure the petition accurately reflects the product for

which the domestic industry is seeking relief. Moreover, as discussed

in the preamble to the Department's regulations (62 FR 27296, 27323),

we are setting aside a period for parties to raise issues regarding

product coverage. The Department encourages all parties to submit such

comments within 20 days of publication of this notice. Comments should

be addressed to Import Administration's Central Records Unit at Room

1870, U.S. Department of Commerce, 14th Street and Constitution Avenue,

NW, Washington, DC 20230. The period of scope consultations is intended

to provide the Department with ample opportunity to consider all

comments and consult with parties prior to the issuance of our

preliminary determination.

Determination of Industry Support for the Petition

Section 732(b)(1) of the Act requires that a petition be filed on

behalf of the domestic industry. Section 732(c)(4)(A) of the Act

provides that a petition meets

[[Page 33464]]

this requirement if the domestic producers or workers who support the

petition account for: (1) At least 25 percent of the total production

of the domestic like product; and (2) more than 50 percent of the

production of the domestic like product produced by that portion of the

industry expressing support for, or opposition to, the petition.

Section 771(4)(A) of the Act defines the ``industry'' as the

producers of a domestic like product. Thus, to determine whether the

petition has the requisite industry support, the Act directs the

Department to look to producers and workers who account for production

of the domestic like product. The International Trade Commission (ITC),

which is responsible for determining whether ``the domestic industry''

has been injured, must also determine what constitutes a domestic like

product in order to define the industry. While both the Department and

the ITC must apply the same statutory definition regarding the domestic

like product (section 771(10) of the Act), they do so for different

purposes and pursuant to separate and distinct authority. In addition,

the Department's determination is subject to limitations of time and

information. Although this may result in different definitions of the

domestic like product, such differences do not render the decision of

either agency contrary to the law.1 Section 771(10) of the

Act defines the domestic like product as ``a product that is like, or

in the absence of like, most similar in characteristics and uses with,

the article subject to an investigation under this title.'' Thus, the

reference point from which the domestic like product analysis begins is

``the article subject to an investigation,'' i.e., the class or kind of

merchandise to be investigated, which normally will be the scope as

defined in the petition.

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\1\ See Algoma Steel Corp. Ltd., v. United States, 688 F. Supp.

639, 642-44 (CIT 1988); High Information Content Flat Panel Displays

and Display Glass Therefore from Japan: Final Determination;

Rescission of Investigation and Partial Dismissal of Petition, 56 FR

32376, 32380-81 (July 16, 1991).

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The domestic like product referred to in the petition is the single

domestic like product defined in the ``Scope of Investigation'' section

above. The Department has no basis on the record to find this

definition of the domestic like product to be inaccurate. The

Department, therefore, has adopted this domestic like product

definition.

To the best of the Department's knowledge, the petitioner is the

sole U.S. producer of the domestic like product. Additionally, no

person who would qualify as an interested party pursuant to sections

771(9) (C), (D), (E) or (F) of the Act has expressed opposition on the

record to the petition. Thus, the petitioner accounts for more than 50

percent of the production of the domestic like product. Accordingly, in

accordance with section 732(c)(4) of the Act, we determine that the

petition has been filed on behalf of the domestic industry. See

Initiation Checklist dated May 17, 1999 (public version on file in the

Central Records Unit of the Department of Commerce, Room B-099)

(Initiation Checklist).

Export Price and Normal Value

The following is a description of the allegation of sales at less

than fair value upon which our decision to initiate this investigation

is based. Should the need arise to use any of this information in our

preliminary or final determination for purposes of facts available

under section 776 of the Act, we may re-examine the information and

revise the margin calculations, if appropriate.

The petitioner identified four potential PRC exporters and

producers of bulk aspirin. The petitioner based export price (EP) on

(1) an offer for sale of the subject merchandise to a U.S. purchaser by

a PRC exporter during the first quarter of 1999; (2) the market prices

of the subject merchandise paid by a U.S. purchaser; (3) U.S. import

statistics for 1998; (4) U.S. import statistics for the first quarter

of 1999; and (5) export statistics from the PRC. From these starting

prices, the petitioner deducted international freight and marine

insurance, when the terms of the sale were delivered, and import

duties, where appropriate. The petitioner based international freight

and marine insurance fees on the difference between the FAS and the CIF

values stated in the U.S. Bureau of the Census import statistics for

1998 imports of subject merchandise from China. Additionally, the

petitioner deducted U.S. import duties of 8.7 percent from the dutiable

value to obtain the net export price.

Because the PRC is considered a nonmarket economy (NME) country

under section 771(18) of the Act, the petitioner based normal value

(NV) on the factors of production valued in a surrogate country, in

accordance with section 773(c)(3) of the Act. The petitioner selected

India as the most appropriate surrogate market economy. For the factors

of production, the petitioner used its own factor inputs and

consumption data for materials, labor and energy, based on the

production processes that the petitioner uses in its plant which is

most comparable in level of technology to production processes utilized

by several of the major PRC producers of bulk aspirin. The petitioner

presented two alternative methods for calculating NV: The first assumes

that the primary material input is purchased, and the second assumes

that this input is produced in-house.

Materials, utilities, and recovered by-products were valued based

on Indian prices obtained from public information contained in an

affidavit supplied by the petitioner on Indian domestic market prices,

international publications containing the prices applicable to India,

Indian import statistics, and U.S. export statistics. Labor was valued

using the regression-based wage rate for the PRC provided by the

Department, in accordance with 19 CFR 351.408(c)(3). The petitioner

reduced the total cost of production (COP) by the value of by-products

recovered. For factory overhead; selling, general and administrative

expenses; and profit, the petitioner applied rates derived from

information gathered from the financial statements of a publicly-traded

Indian producer of aspirin. The petitioner added one percent of COP to

account for packing factor costs, consistent with Department practice

in certain previous cases. (For further information on the EP and NV

calculation methodology, see Initiation Checklist and Calculation

Adjustments Memorandum, both dated June 17, 1999.)

Fair Value Comparisons

Based on the data provided by the petitioner, there is reason to

believe that imports of bulk aspirin from the PRC are being, or are

likely to be, sold at less than fair value. Based on a comparison of EP

to NV, the petitioner's calculated dumping margins range from 8.28

percent to 144.02 percent.

Allegations and Evidence of Material Injury and Causation

The petition alleges that the U.S. industry producing the domestic

like product is being materially injured, and is threatened with

material injury, by reason of the imports of the subject merchandise

sold at less than NV. The allegations of injury and causation are

supported by relevant evidence including U.S. Customs import data, lost

sales, and pricing information. The Department assessed the allegations

and supporting evidence regarding material injury and causation and

determined that these allegations are supported by accurate and

adequate evidence and meet the statutory requirements for initiation.

See Initiation Checklist.

[[Page 33465]]

Initiation of Antidumping Investigation

Based on our examination of the petition, we have found that the

petition meets the requirements of section 732 of the Act. Therefore,

we are initiating an antidumping duty investigation to determine

whether imports of bulk aspirin from the PRC are being, or are likely

to be, sold in the United States at less than fair value. Unless this

deadline is extended, we will make our preliminary determination by

November 4, 1999.

Distribution of Copies of the Petition

In accordance with section 732(b)(3)(A) of the Act, a copy of the

public version of the petition has been provided to the representatives

of the government of the PRC.

International Trade Commission Notification

We have notified the ITC of our initiation, as required by section

732(d) of the Act.

Preliminary Determination by the ITC

The ITC will determine by July 12, 1999, whether there is a

reasonable indication that an industry in the United States is

materially injured, or is threatened with material injury by reason of

imports of bulk aspirin from the PRC. A negative ITC determination will

result in the investigation being terminated; otherwise, this

investigation will proceed according to statutory and regulatory time

limits.

This notice is published in accordance with section 777(i) of the

Act.

Dated: June 17, 1999.

Richard W. Moreland,

Acting Assistant Secretary for Import Administration.

[FR Doc. 99-16000 Filed 6-22-99; 8:45 am]

BILLING CODE 3510-DS-P